Ripple and Kraken's legal leaders respond to a recent court decision rejecting the SEC's claim that certain crypto tokens are securities, marking a major win for the crypto industry.
Ripple and Kraken’s top legal officers have weighed in on a pivotal decision by the Federal Court for the Northern District of California regarding the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Kraken. This decision has reinforced the view that the concept of a “crypto asset security” does not hold up in court, which is a considerable blow to the SEC’s strategy of regulating through enforcement.
Kraken’s Chief Legal Officer, Marco Santori, commented on the ruling made by the Federal Court for the Northern District of California. The court rejected Kraken’s motion to dismiss a lawsuit by the SEC, which alleged that specific crypto tokens traded on Kraken’s platform were securities.
In his statement, Santori underscored the significance of the ruling: “Today, the Federal Court for the Northern District of California ruled that, as a matter of law, none of the tokens trading on Kraken are securities. This represents a major victory for Kraken, the principle of legal clarity, and the broader crypto community. It further validates Kraken’s longstanding position that it does not offer securities on its platform.”
Santori also highlighted that the court criticized the SEC’s definition of “crypto asset security” as ambiguous and potentially misleading. Furthermore, the court questioned the SEC’s interpretation of Kraken’s stance on the necessity of a “written contract” for a security classification.
Santori noted that the court’s decision in Kraken’s case aligns with the earlier ruling in Ripple’s case, establishing that while a token itself is not a security, agreements surrounding the token could be. He warned that the SEC’s current approach to regulation via enforcement could lead to extensive, costly, and time-consuming legal battles across the industry. Santori urged Congress to enact a comprehensive market structure framework that would ensure regulatory clarity and support the growth of blockchain technology.
He concluded with a clear message: “Today’s ruling confirms what we’ve asserted all along: the SEC cannot effectively regulate crypto through enforcement alone.”
In response to Santori’s remarks, Ripple’s Chief Legal Officer, Stuart Alderoty, commented on X (formerly Twitter), echoing the sentiment that this ruling further discredits the SEC’s strategy: “Another court, this time in the Kraken case, confirms there’s no such thing as a ‘crypto asset security.’ Bad news for the SEC, whose entire regulation-by-enforcement strategy hinges on that failed premise.”
